Impact of IMO’S 2020 Global Sulfur Cap

The International Maritime Organization on October 27 announced it was going ahead with a global sulfur cap of 0.5% on marine fuels starting from January 1, 2020, ending years of uncertainty.

Under the terms of the IMO’s MARPOL Annex VI regulation, the 2020 date was “subject to a review, to be completed by 2018, as to the availability of the required fuel oil. Depending on the outcome of the review, this date could be deferred to 1 January 2025.”

Now that the 2020 date has been confirmed by the IMO, a sharply more regulated shipping emissions sector looms into view in the near term. The current global sulfur cap on bunker fuel is much less stringent at 3.5%.

The sharp, step change down to tighter sulfur specifications at sea will have knock-on effects throughout the global energy system, including on road fuels. The cost of the IMO’s regulatory change on the shipping industry is unknown, but every analyst expects it to be large. As well as shipping lines, the IMO’s decision will also impact refiners, crude producers, bunker suppliers, and emissions and air quality affecting the health of millions of people.

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